In BPP, when is the deductible applied?

In Business Personal Property (BPP) insurance, the deductible is typically applied after any applicable coinsurance penalties have been taken into account. This order of operations is critical because coinsurance is a provision that may reduce the claim payout if the insured amount is less than the required minimum percentage of the total value of the property insured. Once any coinsurance penalties are applied, the deductible is then subtracted from the adjusted claim amount, effectively reducing the payout that the insured will receive.

This understanding emphasizes the structure of claims handling within BPP policies, where the deductible acts as a risk retention mechanism for the insured, coming into play after any adjustments related to coinsurance. The correct sequence helps in calculating the net amount payable to the insured after a loss occurs, ensuring that the policyholder fully understands how their claim will be processed. By applying the deductible at this point, insurers can maintain a fair claims process that reflects the true risk-sharing dynamic established by the policy terms.